OpenGate Capital’s Post

We proudly say that we are a leverage driven company, unlike most companies which are a product & labor given. We do not build any ventures unless we can leverage our unfair advantage process & network. That's why we say at GV - we invent, invest, and build game-changing ventures with influential partners to leverage extraordinary growth.

ICYMI: Entrepreneurial Equity Partners Closes Fund II at $546M Chicago-based Entrepreneurial Equity Partners (e2p) announced it has closed its second fund – Entrepreneurial Equity Partners II – with $546 million in aggregate capital commitments. As a middle-market private equity firm, e2p focuses on control-oriented stake investments in or adjacent to the food, consumer, and packaging industries, noting that e2p II will continue this strategy, targeting companies with minimum revenue of $50 million. https://hubs.li/Q02CBtn20

When life happened, my series of posts on stock option plans took a break. But I'm back to tell you about #8 WHEN DOES IT MAKE SENSE TO THINK ABOUT A STOCK OPTION PLAN? In our experience at Ventures'n'Law there are 3 flavours of founders & managers that have stock option plans on their mind: 1️⃣ founders of very early stage companies. These are again split into two categories: - those looking to gain a strategic understanding of what a stock option plan entails (to be prepared when and if the moment comes), or - those that need to incentivise their early team members with something else that money 2️⃣ founders of venture-backed companies. They run into this notion in the first institutional raise, negotiate a standard set of rules concerning their stock option plan and, in most cases, fall into two categories: - they actually set up a stock option plan before their next funding round, or - they don't set up the plan, but rather nominate a few of their team members and conclude agreements with them related to stock (or similar incentives) 3️⃣ mature founders and managers with an established and/or growing business. In all cases we've seen under this category, stock option plans are set up when initial founders want to create a professional management tier around them and/or talent needs to be attracted in new geographies where the company is expanding. As our empirical evidence shows, it's never too early to think about stock option plans. In most cases - especially if you're part of very dynamic markets - you'll either end up building a plan, concluding stock agreements or be a beneficiary of stock grants. A stock grant can have multiple sides involved: the company, the founders, the other shareholders and the beneficiary. What each should look out for in a stock option plan - in future posts. --- March is the last month of NimityLink, the ambassador program promoting stock option plans and employee stock ownership, which Ventures'n'Law is a part of (more about Nimity by SeedBlink in the link in the first comment). I'm sharing a few thoughts and ideas about stock option plans, for those unfamiliar with them. (see my earlier posts on my profile) #venturesnlaw #legalsolutions #community

Exciting News in Sustainable Business! Apis & Heritage Capital Partners (A&H) has just completed their third Employee-Led Buyout (ELBO), transitioning Oregon's premier Blooming Nursery into 100% employee ownership. Read more about this inspiring transformation and how it's paving the way for a more equitable and prosperous future for workers and communities alike. https://lnkd.in/emBmJnBA

New video: This is Mark Bennett – VP Android Partnerships at Google, and one of four partners at Haatch, which invests under the SEIS (Seed Enterprise Investment Scheme). How does Haatch approach seed-stage investing? How do they win deals and help investee companies with their growth plans? Watch now ⏯ https://lnkd.in/em_WmFfc. Mark tells us about: ‣ Changes to SEIS rules – good or bad? ‣ Partnering with British Business Investments (from British Business Bank) ‣ What kind of companies is Haatch looking for? How do they find founders they want to back?  ‣ Recent examples: investing in Made With Intent (real time analytics for e-commerce sites – founder David Mannheim) and BILRS (digital payments remittance – founder Rupert Shaw) ‣ Maturing investments: Slip (digital receipts for retail), Streamkap (database software solutions), Volume (one-click checkout) and Denturly (digital dental solutions) ‣ How does Haatch work with companies after investment?  ‣ What are the risks – how many companies might fail?   Watch now: https://lnkd.in/em_WmFfc 🎧 Spotify https://lnkd.in/eTRg-759 🎧 Apple Podcasts https://lnkd.in/ezrZDY_f 🎧 Google Podcasts https://lnkd.in/eAnsbB52 IMPORTANT The opinions expressed in this video are the interviewee’s own and do not necessarily reflect the view of Wealth Club Limited. This interview, like our service, is not advice. SEIS investments are high risk and illiquid. #seedfunding #seedstage #earlystage #startups

🎉We're thrilled to announce that we've undergone a rebranding and are now Warden Partners! 💼With this exciting transformation comes a fresh perspective and an even stronger commitment to serving you, our valued clients. While our name may have changed, our dedicated team remains the same, bringing you unparalleled expertise and a renewed focus on delivering exceptional advisory services. ✨But that's not all – we're also delighted to introduce new partners joining our ranks and exciting joint ventures on the horizon. This expansion means more resources, more opportunities, and more ways for us to empower you on your business journey. At Warden Partners, our mission is to be your trusted ally in achieving your financial goals. Whether you're navigating capital raising, strategic planning, or exploring new ventures, we're here to provide strategic guidance and support every step of the way. 🗝️Stay tuned for exciting updates as we embark on this new chapter together. We can't wait to continue our journey with you under the Warden Partners banner! #WardenPartners #Rebranding #NewBeginnings #BusinessAdvisory #StrategicPartnerships

Vestwell, the NYC-based fintech powering #workplace savings programs, has secured a whopping $125 million in a preempted funding round, with Lightspeed Venture Partners at the helm. The latest funding brings Vestwell's total raised capital to $227.5 million. Vestwell, founded in 2016 by CEO Aaron Schumm, operates a cloud-native platform that has achieved remarkable success, boasting a 3-year revenue growth of over 1,000%. With more than 1 million users across 300,000 businesses and nearly $30 billion in assets powered, the fintech collaborates with industry giants like Morgan Stanley and JPMorgan Chase & Co.. The platform facilitates a variety of #savings programs, including #retirement, #health, and #education initiatives. Vestwell's public-private partnerships have made it a dominant force, powering 80% of live state auto-IRA savings programs in the US. CEO Aaron Schumm notes the company's profitability track record, having been funded through profitability before this preemptive Series D funding. The fresh capital will fuel state-saving initiatives, enhance existing products, and support new developments, with about half allocated for strategic acquisitions. Vestwell continues to revolutionize the savings landscape, earning its place as a true disruptor. #Vestwell #FintechNews #Investment #Journey

⬛ Exploring Wonder's $700M SAFE Journey —Wonder, a food-delivery startup with significant backing, secured $700 million last week via SAFEs from VCs & institutional investors like Bain, GV, NEA & Jeffries. The decision to opt for a SAFE instead of traditional equity round raised some questions—primarily, was it a good strategic move? Here's a brief explanation behind this unconventional strategy: 1) Valuation Disconnect In today's volatile market, there can be a significant gap between the founder's valuation expectations & what investors are willing to pay. According to CEO Marc Lore (who sold Jet.com & Diapers.com): “In this kind of market there is a disconnect between where investors would value the company and where I would value it. The [SAFE] is basically an elegant solution.” 2) Caps & Discounts Provide Flexibility SAFEs allow parties to defer a concrete valuation until the next equity round. • A valuation cap is not an actual valuation but a target or nominal valuation, ensuring investors don't overpay above the maximum agreed-upon price. • A discount, on the other hand, provides downside protection on the next round's price per share. While the details of Wonder's SAFE were not reported, let's assume a $3.5 billion post-money valuation cap and/or a 20% discount. Wonder had already raised $750M in total, most recently on a $3.5 billion valuation with $100M in debt, so this is probably in the right ballpark. • In this example, for the discount not to apply, the next equity round's pre-money valuation would need to exceed $4.375 billion, calculated as follows: ⬛ X = (Cap / (1 - Discount)) = $3.5B / (100% - 20%) = $4.375B. So the next round's pre-money valuation needs to be at least $4.375 billion to beat the 20% discount. Anything less and the discount will apply, not the cap (it's counterintuitive since everyone thinks the discount applies right above the cap). 3) Strategic Side Letter Rights SAFE investors can negotiate additional rights through side letters. • In Wonder's case, some investors may have already had protective provisions from earlier equity rounds. But even without preferred protections, however, SAFE holders could potentially piggyback on existing preferred stockholders' rights through side letters to exercise limited governance rights and veto protections. 4) Flexibility and Foresight The SAFE structure provides a creative solution in uncertain times. It allows founders to raise capital without setting a firm valuation, while giving investors some downside protection. Wonder's strategic choice to secure $700M through SAFEs may underscore a broader trend of adapting to market conditions. As the venture market continues to evolve, we may see more companies turn to alternative financing structures like SAFEs for speed & simplicity. Ultimately, the key is finding a balance that works for both founders & investors, aligning incentives and enabling continued growth and innovation. #venturecapital #startups

If you run a fast growing #cpg company, it's not enough to just manage your inventory. George Abraham, who has worked with many CPG brands over the past several decades, has seen what happens when you wait too long to set up financial planning and monitoring systems. 𝗜𝗳 𝘆𝗼𝘂 𝗱𝗼𝗻'𝘁 𝗸𝗻𝗼𝘄 𝘄𝗵𝗲𝗿𝗲 𝘆𝗼𝘂𝗿 𝗺𝗼𝗻𝗲𝘆 𝗶𝘀, 𝗶𝘁'𝘀 𝗵𝗮𝗿𝗱 𝘁𝗼 𝗴𝗿𝗼𝘄. That's why it's best to set up these systems early, even if you think you don't need them yet. Do you have a plan to set up your financial infrastructure? DM us today if you're curious to learn more about the best financial infrastructure for your company. ---- #cpgbrands #startupstrategies #startupfounders #financialmodelling #financeandoperations #rhodiumanalytics #cpgindustry #datainfrastructure

All About Liquidation Preferences: Liquidation preferences are a critical term in venture capital financing, serving as a safety net for investors in the event of a company's sale, merger, or closure. Essentially, they dictate the order and manner in which proceeds from a liquidation event are distributed among shareholders, ensuring that investors (usually those holding preferred shares) get paid before founders and employees (who typically hold common shares). The aim is to protect the investment made by venture capitalists or angel investors, prioritizing their return before any profits are shared more broadly. The three main types of liquidation preferences are non-participating, participating, and multiple preferences. Non-participating preferred means that investors can choose to either get their initial investment back or convert their shares to common stock and share in the proceeds, but not both. This is generally more favorable to founders since it limits how much investors can claim. Participating preferred allows investors to get their initial investment back first and then also share in the remaining proceeds, essentially benefiting twice. This can significantly reduce the share of proceeds available to common shareholders, like founders and employees. Multiple preferences amplify this effect, offering investors a multiple of their initial investment before anyone else gets paid, which can be even more dilutive. Founders should be wary of raising too much capital under terms with hefty liquidation preferences. If the "pref stack" – the total amount investors are entitled to off the top – becomes too large, it might require an unrealistically high exit valuation for common shareholders to see any return. This could disincentivize the founding team, as their potential reward diminishes, especially in scenarios where the company doesn't sell for a windfall. #StartupFunding #VentureCapital #Founders #StartupAdvice #EquityFinancing